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NNPC Seeks Capital Market Funds for Oil Projects

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  • NNPC Seeks Capital Market Funds for Oil Projects

The Nigerian National Petroleum Corporation is planning to raise money from the capital market to finance oil projects across the country.

The Federal Government on Tuesday also declared that crude oil would remain useful for a long time despite the use of electric cars in some parts of the world.

The government stated that the number of upstream oil rigs in Nigeria increased from about five to 21 within two years.

The Minister of State for Petroleum Resources, Ibe Kachikwu, and the Group Managing Director, NNPC, Maikanti Baru, disclosed these at the ongoing 2018 Nigeria Oil and Gas Conference in Abuja.

Baru, while speaking on plans by the national oil firm to increase investments in the oil sector, stated that the corporation was seeking more funds to develop oil projects in the country.

He said, “To spur the much needed investment, the government has issued an updated oil and gas policy and initiated the process for enacting a new Petroleum Industry Governance Bill that provides clarity to government institutions and their roles in the industry.

“We plan to be in the capital market to raise more finance for new oil and gas projects such as the NNPC/NAOC JV (Nigeria Agip Oil Company Joint Venture), South Gas Project, North Gas Project and Central Gas Project, and the NNPC/TEPNG JV, among a host of other projects.”

He noted that the oil firm had earlier signed financing agreements of about $2.5bn for different projects, adding that the NNPC’s outlook was to grow the country’s crude production to three million barrels per day.

Baru said, “We have signed third party financing deals with international banks for new oil and gas developments. In 2017 alone, about $2.5bn alternative financing arrangements were signed for the NNPC/SPDC Joint Venture, NNPC/Chevron JV, Project Falcon and the NNPC E&P JV and Schlumberger oil finance deal.

“The outlook for 2018 and beyond is to increase crude oil reserves by a billion barrels at least on a yearly basis. So, we want to move the crude oil reserves from 37 billion barrels to 40 billion barrels by 2020, roughly adding two billion barrels new reserves yearly, and also increase national crude oil production to three million barrels per day.”

Kachikwu had earlier in his address stated that the use of crude oil would continue for a long time irrespective of the presence of electric cars in some parts of the world.

He, however, noted that the most important thing would be the overall impact of crude on the Nigerian economy.
Kachikwu said, “The oil industry is at a very critical stage in its life cycle, and don’t worry about all the nuances you hear about oil going out of stock. The reality is that even when people point to electric cars, quite frankly they still represent only about two per cent, but oil demand continues to increase.

“So, the reality is that more oil is continually found by the day. So, there is enough reason to feel that oil will be there for a long time, but the performance within the oil sector will differ, for it is not how long it lasts but the value it brings to the populace, the owners of the resource.

“It is how we are able to utilise whatever we find to immediately criss-cross other development sectors of this economy, such that by the time it finally filters away, we will have an environment that would have indeed benefitted substantially from oil.”

Kachikwu said it was time for Nigeria to sustain and firm up regional adherence to its kind of crude considering the rise in the sale of shale oil by the United States, as this had heightened crude oil competition in the international market.

He said Nigeria had been increasing its crude barrels, adding that the country had 36.18 billion barrels of proven reserves of crude oil and condensate as of the first quarter of 2018.

He stated, “There are about 80 open acreages currently under review to enhance the prospects in the sector. There are huge FIDs (final investment decisions) in the horizon, like the Bonga South-West and the Zabazaba.

“Our upstream rig counts have increased tremendously to about 21 as of first quarter of 2018; and when you compare that to 17 as of 2017, and indeed almost below five as of 2015, you’ll realise that dramatic progress is being made.’

He added, “Our current production level is roughly between two million and 2.15 million barrels per day, and this means we have relatively established a production baseline that is stable. So, the stability in the Niger Delta has helped, but it continues to be a potential danger area.

“Today, we have about 46 E&P (exploration and production) companies producing from over 180 fields as of the end of 2017 and 55.6 per cent of the production comes from joint venture portfolio.

“About 35 per cent comes from PSCs (production sharing contracts), six per cent from sole risks and three per cent from marginal fields.”

Is the CEO and Founder of Investors King Limited. He is a seasoned foreign exchange research analyst and a published author on Yahoo Finance, Business Insider, Nasdaq, Entrepreneur.com, Investorplace, and other prominent platforms. With over two decades of experience in global financial markets, Olukoya is well-recognized in the industry.

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Economy

Nigeria to Raise VAT to 10% Amid Revenue Crisis, Says Fiscal Policy Chairman

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Taiwo Oyedele, Chairman Presidential Fiscal Policy and Tax Reforms Committee, has said the committee working on increasing the Valued Added Tax (VAT) from the current 7.5% to 10%.

Oyedele announced this during an interview on Channels TV’s Politics Today.

According to Oyedele, the tax law the committee drafted would be submitted to the National Assembly for approval.

He also said his committee was working to consolidate multiple taxes in Nigeria to ensure tax reduction.

He said, “We have significant issues in our tax revenue. We have issues of revenue generally which means tax and non-tax. You can describe the whole fiscal system in a state that is in crisis.

“When my committee was set up, we had three broad mandates. The first one was to look at governance: our finances as a country, borrowing, coordination within the federal government and across sub-national.

“The second one was revenue transformation. The revenue profile of the country is abysmally low. If you dedicate our whole revenue to fixing roads it will be insufficient. The third is on government assets.

“The law we are proposing to the National Assembly has the rate of 7.5% moving to 10% from 2025. We don’t know how soon they will be able to pass the law. Then subsequent increases are also indicated in terms of the year they will kick in.

“While we are doing that, we have a corresponding reduction in personal income tax. Anybody that is earning about N1.5 million a month or less, they will see their personal income tax come down. Companies will have income tax rate come down by 30% over the next two years to 25%. That is a significant reduction.

“Other taxes they pay are quite many: IT levy, education tax, etc. All these we are consolidating into a single one. They will pay 4% initially. That will go down to 2& in the next few years.”

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Nigerian Economy Surges 3.19% in Q2 2024, Service Sector Leads Growth

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The Nigerian economy grew in the second quarter of 2024 by 3.19% year-on-year, according to data released by the National Bureau of Statistics (NBS) on Monday.

This is an improvement from the 2.98% growth recorded in the first quarter of 2024 and the 2.51% achieved during the same period in 2023.

The growth was driven predominantly by the service sector, which saw a 3.79% growth during the quarter and contributed 58.76% to Nigeria’s aggregate GDP.

The service sector, which includes industries such as telecommunications, banking, and hospitality, has become a significant driver of economic activity in Africa’s largest economy as it diversifies away from its traditional reliance on oil and agriculture.

In addition to the strength of the service sector, the industry sector also posted a positive performance, growing by 3.53% during the quarter.

This is a notable recovery from the -1.94% decline recorded in the same period in 2023.

The industry sector includes manufacturing, construction, and utilities, which have benefitted from increased investments and improvements in energy supply.

The agriculture sector, a longstanding pillar of the Nigerian economy, experienced a modest growth of 1.41%, slightly lower than the 1.50% recorded in the second quarter of 2023.

Despite the slower growth, agriculture remains vital to Nigeria’s economy, providing employment to millions of Nigerians and contributing to food security.

The overall 3.19% growth in GDP highlights the resilience of the Nigerian economy despite ongoing challenges such as inflation, currency depreciation, and insecurity.

Analysts had predicted a modest growth rate of around 3.16% for the second quarter, closely aligning with the actual performance.

The Financial Derivatives Company (FDC) also forecasted Nigeria’s annual average GDP growth to reach approximately 3.07% in 2024, which is consistent with the International Monetary Fund’s (IMF) revised projections.

The Q2 GDP performance supports these forecasts, providing cautious optimism for the remainder of the year.

While the growth of the Nigerian economy is a positive development, challenges remain. Inflation, particularly in food prices, continues to strain household incomes, and the naira’s depreciation has increased the cost of imports.

Also, infrastructure deficits and insecurity in various regions of the country pose obstacles to sustained economic expansion.

Despite these challenges, the continued growth in the service and industry sectors demonstrates Nigeria’s capacity to adapt and evolve in an increasingly diversified economy. If these sectors maintain their current trajectory, they could help mitigate some of the pressures facing the economy and improve living standards for Nigerians.

The government’s focus on economic reforms, including efforts to attract foreign investment, improve infrastructure, and enhance security, will be crucial in sustaining and building on the positive GDP growth in the coming quarters.

Economic diversification remains a key goal, and the strong performance of the service sector is a promising sign that Nigeria is moving in the right direction.

With cautious optimism, experts are hopeful that Nigeria can leverage its expanding sectors to achieve sustained economic growth and create more opportunities for its growing population.

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WTO’s Okonjo-Iweala Points to Declining Nigerian GDP Growth as Major Concern

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Ngozi Okonjo Iweala

Ngozi Okonjo-Iweala, Director General of the World Trade Organization (WTO), has raised concerns about the country’s declining GDP growth.

Speaking at the annual General Conference of the Nigerian Bar Association (NBA) on Sunday, Okonjo-Iweala highlighted a troubling trend that has marked the Nigerian economy since 2014.

Addressing an audience of legal professionals, policymakers, and economists, Okonjo-Iweala painted a grim picture of Nigeria’s economic performance, noting that the nation’s GDP growth rate has significantly deteriorated over the past decade.

She observed that between 2000 and 2014, Nigeria enjoyed a relatively robust average GDP growth rate of 3.8%, which notably outpaced the population growth rate of 2.6% annually.

This period was characterized by substantial economic advancements and improvements in living standards for many Nigerians.

However, the post-2014 era has been marked by economic stagnation and decline. According to Okonjo-Iweala, Nigeria’s GDP growth rate has turned negative, recording a troubling average decline of 0.9%.

This reversal, she argues, reflects the government’s failure to sustain the positive economic momentum achieved by previous administrations.

“The contrast between the two decades is striking,” Okonjo-Iweala said. “While the early 2000s brought significant economic progress, the subsequent years have seen a marked decline in GDP growth, which has directly impacted the average Nigerian’s quality of life.”

The WTO Director General attributed this decline to a combination of factors, including inconsistent economic policies, lack of effective reform implementation, and broader macroeconomic challenges.

She said despite various reform attempts and temporary economic improvements, Nigeria has struggled to build on and consolidate these gains.

“The inability to sustain economic growth has had severe repercussions,” Okonjo-Iweala continued. “Many Nigerians are facing diminished job prospects and reduced well-being, as the benefits of earlier growth have not been maintained or built upon.”

In her address, Okonjo-Iweala urged for urgent and comprehensive economic reforms to address these challenges.

She called on Nigerian policymakers to focus on strategies that promote sustainable growth, enhance economic stability, and improve the overall quality of life for the populace.

The call for action comes at a time when Nigeria is grappling with various economic pressures, including inflation, currency depreciation, and unemployment.

Okonjo-Iweala’s remarks underscore the need for renewed efforts to stabilize the economy and implement policies that can drive long-term growth and development.

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